Tax season is here in Singapore!
And this means one thing 💸💸💸
Today’s focus is going to be on something a little bit different.
Have you been engaging in online activities for a profit e.g. provision of online content? Income earned may include advertising, blogging, subscription and commission etc.
If yes, then IRAS will thank you for contributing to the maintenance and improvement of our country’s public services and helping to promote the common good.
Indeed, IRAS even has a Twitter account too.
Example given by IRAS
Daphne earns a commission whenever a customer buys a product she promotes on her video channel/website. She also earns advertising revenue from her video channel.
The commission income and advertising revenue earned through online affiliate marketing are taxable as trade income.
If Daphne’s total annual net trade income exceeded $6,000 or total annual taxable income exceeded $22,000 last year, she will need to e-file a tax return by 18 April.
The income earned from her online affiliate marketing should be reported under “Trade, Business, Profession or Vocation” in her individual income tax form.
How to determine if income from your online activities is taxable
To me, there are two simple rules:
- Activities undertaken for profit are conducted repeatedly in an organised manner like how a typical business is being run
- The business operations supporting the online activities are based in [Singapore] even though the platform may be based overseas e.g. [Amazon, US].
What does this mean for us?
Well, the most important question.
In case you aren’t aware, those nice $20 rewards for referral sign-ups would mean that we are considered as commission agents if our activities are conducted repeatedly in an organised manner like how a typical business is being run.
Increasingly, you’ll notice participating organisations (such as Endowus) submitting information to IRAS electronically for commission earners.
Which is good news, actually.
It means we don’t even have to lift a finger to do a single thing since everything is automatically captured for us!
This also means that if the respective affiliate partners aren’t submitting these data automatically – because most, if not all, will not be able to provide any guidance on taxation matters and thus ask you to clarify directly with IRAS – it is our duty to submit these tax returns.
Oops, I made an error in my previous tax returns
Don’t worry, this is actually more common than you think.
And IRAS knows that some taxpayers may occasionally make errors in their tax returns due to lack of care or awareness of their tax obligations.
The IRAS Voluntary Disclosure Programme (VDP) encourages taxpayers who have made errors in their tax returns to come forward voluntarily, in a timely manner, to correct their errors.
IRAS is prepared to reduce penalties for voluntary disclosures which meet the qualifying conditions.
You can learn more from IRAS :
https://www.iras.gov.sg/taxes/individual-income-tax/basics-of-individual-income-tax/voluntary-disclosure-of-errors-for-reduced-penalties
Importance of good record keeping
If there is a lesson to be had, it would be to have good record keeping practices.
If not, you may want to check out this free eResource bundle that’s meant primarily for newbie online sellers and digital creators who either have no idea what to do, and where to start.
These simple templates will help to facilitate your tax filing process and make your life easier.
Even if you are totally new to managing a online business and completely clueless when it comes to financial mambo-jumbo, tax filing can be a walk in the park if you have the right tools at your fingertips.
To be honest, I have been spending more time than I should trying to get my tax affairs in order.
If record keeping was painful for me, I figured it is probably the same for many people as well. Simply tweak these templates to your own needs instead of starting from scratch.
- Business Records
- Statement of Accounts
- Balance Sheet
Figured I would finally tidy up some templates and share them with all of you out there. Hopefully it’ll be of some help to you!
Download Tax Assistant from this link here.
Additional IRAS Resources
None of these information are anything new and have been in effect for quite a number of years.
Below are additional resources from IRAS that can help to clarify your doubts.
Disclaimer : I do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
If you do have questions and wanna chat, just ping me at any time.
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Hello! I’m Kevin, Turtle Investor
At the age of 30, I am the Personal Finance Blogger who laid claim to a negative net worth of minus $25,755 – and decided to turn things around.
- Seven years later in 2019, I hit CPF Full Retirement Sum (FRS) of $176,000 without making a single cent of CPF top-up
- In nine years, I have added more than $1 million to my net worth
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I am married to a lovely wife and that means dual income with no kids. In my free time, I chase miles so that we can fly in business class. My hobbies include making pocket change off this blog and sharing everything I know with you!
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